Enterprise Financial Services' (NASDAQ:EFSC) Dividend Will Be Increased To $0.25
Enterprise Financial Services Corp (NASDAQ:EFSC) has announced that it will be increasing its dividend from last year's comparable payment on the 31st of March to $0.25. Although the dividend is now higher, the yield is only 1.9%, which is below the industry average.
View our latest analysis for Enterprise Financial Services
Enterprise Financial Services' Payment Expected To Have Solid Earnings Coverage
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.
Enterprise Financial Services has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. While past data isn't a guarantee for the future, Enterprise Financial Services' latest earnings report puts its payout ratio at 17%, showing that the company can pay out its dividends comfortably.
Looking forward, EPS is forecast to rise by 14.6% over the next 3 years. Analysts estimate the future payout ratio will be 19% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
Enterprise Financial Services Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the annual payment back then was $0.21, compared to the most recent full-year payment of $1.00. This works out to be a compound annual growth rate (CAGR) of approximately 17% a year over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
The Dividend Looks Likely To Grow
Investors could be attracted to the stock based on the quality of its payment history. Enterprise Financial Services has impressed us by growing EPS at 21% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.
Enterprise Financial Services Looks Like A Great Dividend Stock
Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Enterprise Financial Services that investors should know about before committing capital to this stock. Is Enterprise Financial Services not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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